Today's Must Read
Security Business Aids Cisco (CSCO) Despite China Exposure
Solid Insurance Business Aid Berkshire (BRK.B), Cat Loss Ail
Thursday, September 12, 2019
The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 16 major stocks, including Amgen (AMGN), Cisco (CSCO) and Berkshire Hathaway (BRK.B). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today.
Amgen’s shares have outperformed the Zacks Biomedical and Genetics industry on a year-to-date basis (0.6% vs. -1.4%). The Zacks analyst thinks that while Amgen’s newer drugs — Prolia, Xgeva, Blincyto, Kyprolis — will drive sales, biosimilar and brand competition for its legacy products will create pressure on sales in the second half.
Meanwhile, uptake of key drug, Repatha, has been slow due to payer restrictions. However, recently launched products, including Aimovig and Evenity, biosimilars and international expansion provide incremental growth opportunities.
Amgen is also progressing with its pipeline. In the past five years, Amgen has launched nine products, including two in new therapeutic areas. Amgen boasts a strong biosimilars pipeline, which could be an important long-term growth driver. The company’s restructuring plan is making it leaner and more cost efficient. Amgen’s shares have outperformed the industry so far this year.
Shares of Cisco have lost 4.9% in the past six months, outperforming the Zacks Computer Networking industry’s fall of 5.2%. The Zacks analyst believes that Cisco is benefiting from a solid security business. Strong contribution from Infrastructure Platforms and applications is a positive.
Moreover, order strength and improving traction of the subscription-based business model are tailwinds. Further, a strengthening collaboration portfolio, which includes Webex Teams, bodes well. Additionally, the acquisitions of Voicea and CloudCherry hold promise. Notably, shares of the company have outperformed the industry in the past year.
However, weakness in service provider business in China remains a concern. Further, stiff competition from Arista and Juniper in switching and routing verticals is likely to create pricing pressure and impact profitability. Also, increasing investments in product enhancements are likely to limit margin expansion at least in the near term.
BRK.B’s shares have gained 2.9% over the past six months, outperforming the Zacks Insurance - Property and Casualty industry’s rise of 2.5%.
The Zacks analyst believes that Berkshire Hathaway’s inorganic growth story remains impressive with strategic acquisitions. A strong cash position supports earnings-accretive bolt-on buyouts. Demand for utilities is expected drive earnings growth. Continued insurance business growth also increases float. Its non-insurance businesses are delivering improved results. A sturdy capital level provides further impetus.
However, exposure to catastrophe loss remains a concern as its property and casualty insurance business generates maximum return on equity. Huge capital expenses due to railroad operations pose concerns.
Other noteworthy reports we are featuring today include Eaton (ETN), T. Rowe Price (TROW) and McKesson (MCK).
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Note: Sheraz Mian heads the Zacks Equity Research department and is a well-regarded expert of aggregate earnings. He is frequently quoted in the print and electronic media and publishes the weekly Earnings Trends and Earnings Preview reports. If you want an email notification each time Sheraz publishes a new article, please click here>>>